Sepp Hasslberger: The Gift Economy - Receiving stimulates giving

I’m pointing you to Sepp’s blog entry, but using that as a spring board to my own musings.

It’s better to give than to receive? We’ve heard that, and we can contemplate its meaning. We’ve also heard that there is nobility in receiving a gift well, with respect, humility, or better: generosity. We’re recipients of the gifts of nature, of life. How well have we received them? Receiving well involves stewardship - it involves valuing the act of generosity and the gift received.

We’ve been gifted a gift economy. Have we received it well? Two aspects of reception here … one is bound in attitude, relation and perception - the other in our stewardship as recipients.

When we hear about the gift economy, do we give it it’s proper due? When we receive from the greater gift economy, are we thankful enough to participate with generosity ourselves.

There are ways to receive with generosity, we should endeavor to live that way.

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By Lou Barnes, Friday, March 7, 2008. Mortgage rates spiked to 6.75 percent on Wednesday, only today sliding back into the 6.5 percent range (these rates with no loan fees). There is good reason to expect rates to fall back, and maybe a long way, but only in the context of effective intervention by federal authorities.There is no sign of such intervention at the moment. However, developments soon ahead will attract the attention of officials preoccupied with market solutions, ordinary monetary operations, opposition to any form of “bailout,” wishful thinking, denial, or the view from any of several ivory towers.This week marked the transition from a relatively orderly seven-month repricing of credit and reduction of leverage to fire sale — just plain panicked dumping. The Fed’s number one responsibility is orderly markets. Beyond inflation or economic growth or any other objective, orderly markets come first: Prevent at any cost a disorderly liquidation that leads to chain-reaction systemic failure. The Fed has failed. As have the Treasury, Congress and the White House.The spread between government-guaranteed (or effectively so) mortgage-backed securities and 10-year Treasurys reached an all-time, utterly non-economic 3 percent. The spread between AAA-rated municipal bonds and Treasurys is out of line by 2 percent. These and other credit markets this week for the most part ceased to function, the capital in the banking system effectively exhausted. Scott Simon of bond-giant Pimco, a calm sort whose remarks are usually limited to time and temperature, said, “Everything is telling you that the financial system is broken.”The good news: I have believed since August that we would get to this place, and then obvious danger would overcome bailout resistance in both parties and the public. A financial accident would wake us up before grave damage would be done to the economy. We have all the tools crafted in the Depression, and in banking crises large and small since. These tools will work, and fast. A fire sale is a collapse of confidence, nothing-to-fear-but-fear-itself; confidence can be restored as fast as it left.So what kind of accident will do the wake-up trick? The onset of credit-market fire sale is too technical for civilians, but they do get the stock market. The S&P 500 yesterday broke crucial support at 1,320; made a half-hearted rally this morning after job-market news that was awful but not disastrous; fell short; and has little “technical” support for about a thousand points. A meltdown like that will get the attention even of the stock market ya-yas so oblivious to this crisis since August.The obvious onset of recession should have opened the door to federal action by now, but dissemblers have muddied the moment. Nothing like an honest-to-goodness stock-market crash to clarify the mind, with the S&P now at 1,283 and the Dow down 205. Even better: a morning when they ring the NYSE bell, but can’t open the market.The top Pimco investment officer, Mohamed El-Erian, who was raided from Pimco by Harvard to run its gazillion-dollar endowment, then raided back by Pimco (the guy is hot), said: “A decision is going to have to be made to cross two lines in the sand: to use the government’s balance sheet, and to breach rights of property and contracts.” The only way to stop a credit fire sale is by government guarantee and outright purchase of illiquid assets; the contracts are mortgages to be reworked (I’m opposed to that foreclosure solution, but you can’t have everything.)More good news: Everybody needs something not to worry about: Inflation is NOT a problem. Wage growth in the last year has been 3.7 percent, a half-point below inflation. Huge increases in energy and food costs are compressing spending on everything else, which is deflationary for everything else. Drop a brick with my name on it on the nearest stagflationist: You cannot have sustained inflation without a wage-price spiral.And another thing: Stop worrying about the dollar. Europe is following us into recession, and as global demand falls, we’ll see whose currency is safe.Lou Barnes is a mortgage broker and nationally syndicated columnist based in Boulder, Colo. He can be reached at lbarnes@boulderwest.com.

‘Non-resident’ millionaires intend to stay one move ahead of the chancellor. For Britons living in Monaco and commuting to work in the City of London this week, the drab weather - more Cornish coast than Côte d’Azur - could be a sign of things to come. Today’s budget is likely to make life harder for the 2,000 millionaires who call the handkerchief-sized tax haven home. Until now, tax rules that allow “non-residents” 90 days a year in Britain have contained a crucial loophole: the taxman has not counted “travel days” entering and leaving the country, allowing businesspeople to commute in on a Monday, leave on Wednesday, and claim to have spent just one day in the UK.

It has in effect allowed Britons to spend most of the year - up to 270 days - working in Britain, while claiming to be residents of tax havens such as Monaco and to avoid paying tax.

That will change under a stricter enforcement of the rules to be unveiled today which has unnerved tax lawyers serving Britons in several tax havens.

The change - likely to count travel days or overnight stays in the residency total - will particularly affect the so-called “Monaco mob”, millionaire City workers whose commute entails a seven-minute helicopter ride from Monaco to Nice for a connecting flight to London, often by private jet, before a swift return to the Riviera.

But millionaires claiming residency in Monaco have told the Guardian they plan to circumvent the new rules by abandoning their weekly commute or transferring board meetings to offshore locations.

Many said they would simply work in London several days at a time to cut down on travel days.

At Monaco’s harbour, a row of British Cayman Islands flags fluttering above the yachts behind him, Keith Luxon, a banker and seven-year Monaco resident, said the change was “completely unjust. It will have a big impact.

“Whether it’s here, Jersey, Guernsey or the Isle of Man, the guys will have to change the way they work. The classic example is someone who flies in and out of London 90 days a year for work. Under the new rules he is suddenly a UK resident for tax purposes. Some people are talking about taking this to the European court of human rights.”

Rob Rutter, who works in finance and, as president of the British Association of Monaco, represents 600 expatriates, said the rule change could see more Britons abandoning the commute to the City to work from home in Monaco.

Many already work by tele-conference from flats which overlook the Mediterranean. He added that while his members “will have to be careful”, none were prepared to abandon their lives in the principality.

“It’s not just tax - it’s about lifestyle. The streets are immaculate, there’s no crime. You can have breakfast on your terrace, go skiing in the morning, and be back to the beach for the afternoon. I don’t know a single person going back. They’ll change their lifestyles - it’s a nuisance - but they’ll get round it.”

Roger Munns, who runs two property businesses for Monaco multimillionaires - “millionaires don’t cut it in Monaco” - pointed to another way round the rules. Those unwilling to change their commuting patterns, he said, were restructuring their companies to funnel money into their spouses’ Monaco bank accounts. “These people are quick thinkers,” he said. “They can move quicker than the government.”

The principality’s two square kilometres of high-rise flats jostle together to use every inch of tax-free space. Property is in such high demand - £3m will buy a small flat - that the authorities are reclaiming 25 acres from the sea.

In one bar a group of City bankers, speaking on condition of anonymity, confirmed they would “play the rules” to find a way to continue spending time at their desks in London while maintaining non-residency status and paying zero income tax.

In Monaco’s decadent playground - a favourite for Britons since 19th-century industrialists first rolled dice in Monte Carlo’s casino - it is easy to see how the state has proved popular for Europe’s most moneyed expatriates.

The night for many “in-crowd” expatriates begins at the Bar Américain, with its Bentleys and Rolls Royces parked outside. The same faces dine in one of the two Michelin-starred restaurants in the Hôtel de Paris, and end the night in Jimmy’z, a nightclub where two shots cost €40 (£30) and the manager, Cyrille Regottaz, knows the “west London set” from his days running the Mayfair Club.

Another feature of the local nightlife is the well-dressed prostitutes with forced smiles who, more than one British resident admitted, are what “some of us spend our money on”. For the less extravagant, there is Sunday roast at the Columbus hotel, owned by David Coulthard, or trips to French streets across the border for normal priced lager and football.

However they spend their money, there is a unease among Monaco’s British residents at the Treasury’s attack on their way of life. “Most of these people running businesses [and living in Monaco] had got the whole system worked out - and it worked just fine,” said Damian, a middle-aged “retiring accountant” and long-time Monaco resident. “And now the Treasury has moved the goalposts. It’s not on.”

John Christensen, director of Tax Justice Network, which campaigns against tax avoidance, said it was unsurprising Monaco’s exiles had devised ways to circumvent the tightened 90-day rule. “What a lot of normal people don’t realise is that this is a massive game, almost pathological: ‘We do not want to pay tax.’”

In Bar Américain in the early hours of Sunday, that attitude was on full display. Men with British accents blew cigar smoke at the ceiling, while women speckled with pearls sat beside them and waved champagne into their glasses. In the corner, through thick smoke and spinning waiters, the band played on.

In numbers:

The number of British residents in the tax haven of Monaco 2,054

Monaco’s total number of residents 32,020

Square kilometres: the size of the principality. The authorities are also reclaiming 25 acres from the sea to satisfy the demand for residential development 2

Cost of a small flat in Monaco £2-3m

The price of a 30-minute executive tax ride from Monaco to Nice airport, to board a commuting flight to the City of London £878

More proof that a McCain presidency would be deadly serious in its attempt to rid government of the wasteful “earmark” spending.

Home prices fell in August for the 25th consecutive month and prices in 10 major markets plunged a record 17.7% year over year, according to a key index of real estate values released Tuesday.

The S&P Case-Shiller Home Price 10-city index dropped 1.1% for the month.

The 20-city index recorded a record year-over-year decline of 16.6% with a 1% fall in August.

“It’s Economics 101,” said Jared Bernstein, senior economist with the Economic Policy Institute. “You have a huge speculative bubble leading to a severe inventory overhang. And now home prices will have to decline accordingly.”

The indexes compare the sale prices of the same homes each year to determine price trends and are considered one of the most accurate home price gauges.

The hardest hit of all 20 cities on a year-over-year basis was Phoenix, where prices plummeted 30.7% during the past 12 months. Las Vegas prices plunged 30.6% and Miami sank 28.1%.

The cities that held up the best were Dallas, which saw a decline of just -2.7%, Charlotte NC (down -2.8%) and Boston (off -4.7%). No city showed a price gain during the last 12 months.

In August, San Francisco saw the biggest price declines, down 3.5%. Phoenix (-2.9) and Las Vegas (-2.4) also reported sizable losses for the month. Two cities showed gains in August; Cleveland prices rose 1.1% and Boston prices inched up 0.1%.
Price declines picking up

Of course, the August indexes don’t reflect the financial market meltdown that hit in September and severely restricted access to credit, according to Richard DeKaser, chief economist for National City Corp (NCC, Fortune 500). He believes the pace of price declines has picked up since then.

“There are two explanations for these steeper declines,” he said, “neither of which are encouraging. One is that the difficulty in obtaining credit has further constricted demand. The second is that home sellers are finally capitulating on prices. They’ve been holding out for months, refusing to sell except at their prices. Now they’re throwing in the towel.”

Bernstein agrees. “Buyers and sellers have been staring at each other to see who blinks,” he said. “Sellers may be blinking first.”

That is reflected in existing home sales volume, which ramped up 5% in September as prices fell. Even new home sales went up slightly in September.

Much of that statistical trend is being driven by data from hard-hit western states like California. The California Association of Realtors reported last week that home sales volume jumped a whopping 97% in September compared with the same period a year ago. But the median price of an existing home has fallen 41%.

If that trend spreads to other states, price weakness could last for many more months, even as sales volume picks up. What happens after that largely depends on the confidence bolstering effect of the government economic stimulus packages, according to DeKaser.

“I’m optimistic,” he said. “More credit will be available and housing inventories will be reduced. The deterioration will give way to a more balanced market.”

But not everyone agrees that the stimulus packages, which are designed to loosen up tight credit, will prove helpful. Peter Schiff, president of broker-dealer Euro Pacific Capital, believes the impact will be decidedly negative.

“The goal of all these plans is to give consumers more money to spend. However, excess consumer spending is part of the problem, not part of the solution” he said. “After a decade-long spending orgy, market forces are finally trying to restrict consumer spending and dampen credit. But the stimulus looks to provide a new source of funds after savings, income, and credit have been exhausted. Our imbalanced economy is in desperate need of retrenchment, but stimulus plans will effectively hold the firemen at bay while throwing gasoline on the flames.”

Schiff explained that the housing boom’s exotic mortgages, which let people buy homes with zero money down, have vanished. Now people must save to afford a home. But easy credit means people will buy more consumer goods and save less to put towards housing. As a result, he expects home prices to fall a lot more.

“They’ll surrender all the gains they made in the past 10 years,” he said, “and be even lower than they were 10 years ago.”

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GE Inspection Technologies has signed a definitive agreement to acquire phoenix|x-ray, a leader in high-resolution computed tomography (CT) / X-ray technology used in non-destructive testing (NDT) applications. The transaction will be completed upon receipt of regulatory approvals. Terms of the deal were not disclosed.

I took this picture last Sunday. As usual, there was a long line at this particular gas station in Makati. But this time the waiting time was longer - quite unusual because nowadays most vehicles pump up just enough gas to last them the week.

After what felt like over 20 minutes, this is what we saw:

Gas hoarding at its finest but who can blame them - this weekend gas prices went down a buck or 2 (I think). I’m not sure if its even legal but it sure gives a new meaning to “full tank.” Fill’er up!

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